EURUSD tops 6-month highs

The euro topped 6-month highs against the dollar this morning after the Washington Post reported overnight that President Trump revealed highly classified information in a meeting with Russian officials. The White House immediately denied the allegations, but a tweet from the president this morning seems to contradict that message:

“As President I wanted to share with Russia (at an openly scheduled W.H. meeting) which I have the absolute right to do, facts pertaining…to terrorism and airline flight safety. Humanitarian reasons, plus I want Russia to greatly step up their fight against ISIS & terrorism.”

This has weakened the dollar for two reasons. First, ostensibly mixed communication out of Washington. Trump’s national security adviser H. R. McMaster – who was in attendance at the meeting with Russia – addressed the press late yesterday, stating: “at no time were intelligence sources or methods discussed. The president did not disclose any military operations that were not already publicly known.” Investors see the President’s tweet as a disjointed if not direct contradiction to McMaster’s statement. Second, if the president did release confidential information, this could jeopardize the US’s relationship with our allies. The President has the legal right to declassify any information as he sees fit, but investors are worried about the optics. If other nations aligned with the US see a risk of shared intelligence being released they may not be as eager to share such knowledge with the US.

EURUSD moved into the high 1.10s, this news comes on the heels of speculators in the futures market going net long on euro bets for first time since May 2014 earlier this week. This could allow the euro to maintain these gains and possibly push higher against the dollar.

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